Cryoport, Inc. Q4 FY2024 earnings call

• 2024 was a tough year for life sciences, but Cryoport concluded the year with solid results. The Life Sciences Services business continued to expand with double-digit growth in BioStorage and BioServices revenue. - The Life Sciences Services business represented 67% of total revenue in 2024, up from ~62% the prior year. Support for commercial cell and gene therapy had strong growth in Q4 and full year. - Cryoport supported a record number of clinical trials (701) in 2024, with 81 in Phase 3, and commercial approvals increased from 14 to 19. - In the Life Sciences Products business, order patterns were showing signs of stability, and cost management initiatives were implemented, leading to an improvement in gross margin in Q4 2024. - Cryoport opened IntegriCell cryopreservation solution in Houston, Texas and Liege, Belgium, and introduced the Cryoport Express Cryogenic CXHV3 shipping system, confident these undertakings will open new revenue streams.

For the full year 2024, total annual revenues were $228.4 million. The Life Sciences Services business represented 67% of total revenue (up from approximately 62% the previous year). BioStorage and BioServices revenue had double-digit year-over-year growth in both the fourth quarter and full year periods. Commercial cell and gene therapy support saw a 37% increase in the fourth quarter and 20% for the full year. For the Life Sciences Products business, order patterns were beginning to show signs of stability. In the fourth quarter of 2024, the gross margin rose to 45.8% compared to 40.6% in the same period the previous year.

• Projected 23 VLAs or MMA filings in 2025, up from 11 in 2024, with 3 already in January 2025. - Full-year 2025 revenue guidance is in the range of $240 million to $250 million. - Confident of returning to positive adjusted EBITDA during 2025.

• Macroeconomic conditions and market dynamics could cause actual results to differ materially from expectations. - Tariffs on steel and aluminum could impact costs, but plans to pass on surcharges. - Dependence on the growth of the cell and gene therapy industry; any slowdown could affect revenue.

Q: Can you elaborate more on early signs of stability from customers across geo regions for MVE?

A: Jerrell Shelton said signs of stability are in the order patterns.

Q: To what degree are local substitutes available in China and is the China strategy sufficient?

A: Jerrell Shelton said local sources are available in China and they're implementing their China strategy. Robert Stefanovich added they have manufacturing facilities in the US mitigating risk. Thomas Heinzen said there's no assumption of recovery from China in the guide.

Q: How are you thinking about revenue contributions from five new therapies approved in 2024 for 2025 guidance and impact of FDA layoffs on approval timelines?

A: Mark Sawicki said they anticipate multiple new therapies from 2024 will contribute meaningfully but can't break out individual contribution. He also said they do not anticipate FDA activities to impact cycle time.

Q: On profitability, when might Cryoport reach positive adjusted EBITDA in 2025?

A: Robert Stefanovich said they've made good progress with adjusted EBITDA moving from negative 6.6 million to negative 1.3 million in Q4, annualized to about 22 million, and they're well on track to reach positive adjusted EBITDA in 2025, timing depending on service and gene therapy ramp.

Q: Is there any mixed dynamic with NPE order patterns being stable?

A: Jerrell Shelton said there's no mixed dynamic to point to.

Q: Once a therapy is commercial, what are the drivers of revenue growth to Cryoport?

A: Mark Sawicki said they pursue both volume ramp from patient treated standpoint and increasing wallet share with manufacturers.

Q: What are the trends you're expecting to see in 2025 with respect to biopharma, biotech funding?

A: Mark Sawicki said 2024 was a good year for cell and gene investment, 2025 may be more challenging but markets are positive, and most 2022-2023 activities have shaken out with clinical trial activity improving.

Q: Can you talk about gross margin expansion, was it more cost-reduction efforts or top-line growth?

A: Robert Stefanovich said a lot of it is related to cost measures implemented in the second half of the year, with service side gross margin moving from 40.8% to 46.2% in Q4 and product side from 40.4% to 45.1%, and they expect further improvement with new initiatives like IntegriCell having some drag initially but upward mobility over time.

Q: Is IntegriCell generating revenue now and what's the revenue contribution expectation in fiscal '25?

A: Mark Sawicki said they have signed first contracts in Q4 and continue to sign in Q1, with very modest contribution in 2025 and notable contribution starting in 2026 due to audit validation process.

Q: Can an existing clinical trial protocol be altered to adopt IntegriCell?

A: Mark Sawicki said it's not an alteration, it's an improvement, and can be transitioned into existing protocols with possible addendums.

Q: Any seasonality concerns for commercial cell and gene therapy segment?

A: Mark Sawicki said there's nothing specific from a seasonality standpoint, only facility shutdowns which vary by company.

Q: Are you in a sideways spending pattern until top line comes back up or are there early CapEx expenditures?

A: Robert Stefanovich said there will be CapEx expenditures related to new facilities, but they don't expect significant increase in OpEx and will continue to look for ways to improve efficiency and reduce cost without changing growth initiatives.

Q: How do you expect the broader market and non-cell and gene therapy part of services business to evolve in 2025?

A: Mark Sawicki said non-cell and gene therapy parts like direct-to-patient, vaccine activities, transportation of non-cell and gene pharmaceutical products, reproductive medicine, and animal health will see growth, with animal health expected to have acceleration in clinical trial activity for companion animal cell therapy products in 2025.

Q: On the '25 guide, what's the expectation for commercial revenue growth bucket?

A: Mark Sawicki said they'll probably be in the high 20s range for commercial revenue growth in 2025, being stronger than 20% in 2024 but not in the mid 30s.